West Texas Intermediate WTI crude oil pierced the daily resistance on Monday following a surge on the back of the market's presumption that OPEC+ will turn a blind eye to US President Joe Biden's request to add additional supply to the market when the group meets later this week. The price travelled from a low of $82.77 to a high of $84.85.

"US President Biden had called upon those countries with spare capacities to step up their oil production to a greater extent. It is doubtful whether OPEC+ will respond to this call, however. Comments made by the two leading countries in the alliance, Saudi Arabia and Russia, indicate that production in December will be increased as planned by 400,000 barrels per day," Commerzbank analysts explained. 

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

The tone of analysts and market commentators on oil remains largely bullish; Goldman Sachs on Monday reaffirmed their $90.00 per barrel year-end target for Brent (currently trading just above $84.00), given their expectations for a supply deficit of 2.5M barrels per day. Analysts at oil brokerage PVM agree that the “fundamentals have not changed, and the oil market will remain tight in the near-term”, and a recent poll of 41 analysts and economists conducted by Reuters showed that Brent is expected to average around $80.00 per barrel for the rest of the year. One common theme underpinning the bullishness exhibited by many analysts is expectations that the shortage of natural gas in Europe will feed into higher oil demand as power companies switch strategically from using costlier natural gas to relatively less costly derivatives of crude oil.

WTI still trading inside the hawkish channel

Nov 02 2021